Millions of public sector workers to benefit from revised pension offer
More than a million people are set to benefit from the government's revised proposals for public sector pensions.
Public service workers within 10 years of retirement age on 1 April 2012 will not be made to work longer or suffer any decrease in the pension they receive, although workers may have to contribute more.
People very close to the 10-year threshold may also see some additional protection, under the new offer.
The government's proposal includes a more generous accrual rate - the rate at which future benefits will accumulate – as well as higher "cost ceilings", which will see a limit on contributions paid by the government.
In addition, the offer means low and middle earners working a full career will receive pension benefits "at least as good, if not better, than they get now'.
For example, under the new scheme, a nurse with a salary at retirement of £34,200 would receive a pension of £22,800 each year, compared to only £17,300 under current arrangements.
Long way to go
However, the government remains unchanged on its desire for public sector workers earning more than £15,000 a year to contribute more to their pension. These reforms will be phased in over the next three years from April 2012, and will amount to an average 3.2% extra contribution for each employee.
Danny Alexander, chief secretary to the Treasury, says public sector pension reform is "inevitable".
He says the government has listened to public sector workers, and come up with a deal that he considers "fair and affordable". "The lowest paid and people 10 years off retirement will be protected – and pensions will still be among the very best available," he says.
The government is hoping these proposals will mollify the union chiefs who are planning industrial action on 30 November.
John Cridland, director-general of the Confederation of British Industry (CBI), says: "These proposals offer additional protection to public sector workers, particularly to the low-paid, while still achieving the essential reform which taxpayers need.'
He adds: "It is not in the interests of public sector workers to plough on with industrial action, which would cause significant disruption to everyone."
This article was taken from our sister website Money Observer
Confederation of British Industry
The CBI promotes the interests of its members, some 200,000 British businesses, a figure that includes 80% of FTSE 100 companies and around 50% of FTSE 350 companies. Formed in 1965, it’s the lobbying organisation for UK business on national and international issues and seeks to influence the UK government to help businesses compete effectively.